Feb. 10 (Bloomberg) -- Toyota Motor Corp. will stop
building cars in Australia in 2017, spelling the end of the
local industry after Ford Motor Co. and General Motors Co.
announced last year they also plan to pull out.

The Japanese company, which started making cars in the
country in 1963, cited high manufacturing costs, an elevated
Australian dollar and low economies of scale. Toyota has 2,500
manufacturing employees in the country, it said in an e-mailed
statement today.

Toyota’s decision marks the end of an Australian car
industry that traces its roots to 1901, as a fall in trade
tariffs, the small scale of local plants and an Australian
dollar that surged almost 50 percent against the U.S. currency
from 2009 to 2012 pushed consumers to cheaper imports. Ford said
in May that it would stop output in October 2016, while GM’s
Holden unit announced a 2017 departure in December.

“Once Ford and Holden went, it was always going to be hard
for the last one to survive,” said Stephen Walters, JPMorgan
Chase & Co.’s chief economist in Australia, citing the strength
of the currency, small scale of local production and high costs.
“There will be spillover effects in terms of employment lost in
the car industry itself and related industries.”

Australia’s Biggest

Toyota’s manufacturing halt will leave Australia with no
consumer carmaker for the first time in peacetime since at least
1925, when Ford established a plant in the southern city of
Geelong to assemble Model Ts. The industry, including parts
manufacturers who supply the three carmakers, employed 50,370 in
February 2013, according to government data.

The Japanese company is Australia’s biggest automotive
exporter, sending overseas about 73 percent of the 101,424 cars
produced in 2012, according to a November submission to a
government inquiry on the future of the industry.

“We did everything that we could to transform our
business, but the reality is that there are too many factors
beyond our control that make it unviable to build cars in
Australia,” Toyota Australia President Max Yasuda said in the
statement. “Our manufacturing operations have continued to be
loss-making despite our best efforts.”

Global Restructuring

Tony Abbott’s government, which was elected last September
vowing to cut taxes and ease red tape for businesses, has said
it doesn’t believe in “corporate welfare” to prop up ailing
companies.

It wouldn’t “run down the road after Holden waving a blank
check,” Abbott said during the election campaign last August,
criticizing A$700 million ($624 million) of extra funding for
the industry promised by the government at the time.

The Aussie fell 0.5 percent to 89.17 U.S. cents as of 7:52
p.m. in Sydney. The currency strengthened 2.3 percent last week,
the most since the period ended Sept. 6, to 89.59.

Toyota’s Australian unit is based in Victoria, which lost
12,600 jobs in December, the most of any Australian state in the
latest employment data released Jan. 16. In the 12 months to
November 2013, Australia lost 29,577 jobs in manufacturing.

The decision is devastating “for thousands of Australian
workers and the entire Australian manufacturing industry,” Paul
Bastian, the national secretary of the Australian Manufacturing
Workers Union, said by e-mail.

Toyota had been attempting to amend its contract with plant
workers under plans to cut the cost of producing cars locally by
about A$3,800 a vehicle. It had appealed a Dec. 12 decision by
Australia’s Federal Court blocking a vote among its workforce on
the changes.